Posts Tagged ‘ICSI’

Profession, Professional, Professional Body & Professionalism- 7 ICSI

Thursday, April 23rd, 2009

This is part 7 and concluding part of the topic Professional Body and Professionalism by CMA B V Prabhakar. He discusses on how accounting bodies IMA-USA, ICWAI-INDIA & ICSI-INDIA apply the above principles.

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THE COMPANY SECRETARIES ACT, 1980

ICSI, being a statutory body is regulated by the CS Act and for the management of the affairs and for discharging the functions assigned to it by the CS Act , there is a Council of the Institute.

Every member of the Institute is entitled to designate himself as a Company Secretary.

There are two classes of members,

c) those who are in practice and

d) those who are otherwise occupied.

 

The practising members conduct secretarial audit, annual return certifications and various other statutory certifications. Conducting of such statutory audits and certifications require high degree of competence and proper professional conduct.

The Council has been empowered to institute any enquiry into cases where it is prima facie of the opinion that a member is guilty of professional or other misconduct.

Professional misconduct defined

Section 22 of the Act read with the Schedules to the Act , contains an illustrative, though not exhaustive definition of “Professional misconduct”. These constitute the Code of professional conduct applicable to Company Secretaries.

Professional Misconduct falls under the following categories:

FIRST SCHEDULE:

Part I : Professional misconduct in relation to Company Secretaries in Practice

Part II : Professional misconduct in relation to Members of the Institute in service

Part III: Professional misconduct in relation to Members of the Institute in generally

Part IV: Other misconduct in relation to Members of the Institute generally

SECOND SCHEDULE:

Part I : Professional misconduct in relation to Company Secretaries in Practice

Part II : Professional misconduct in relation to Members of the Institute generally

Part III: Other misconduct in relation to Members of the Institute generally

“Other Misconduct”

A member is liable to disciplinary action under the CS Act, if he is found guilty of any professional or “other misconduct”.

“Other misconduct” as listed in Part III to the Second Schedule has not been defined in the Act but this provision empowers the Council to enquire into any misconduct of a member even if it does not arise out of its professional work. This is considered necessary because a Company Secretary is expected to maintain the highest standards of integrity even in his personal affairs and any deviation from these standards, even in his non-professional work, would expose him to disciplinary action.

“Other misconduct” would also relate to conviction by a competent court for an offence involving moral turpitude punishable with transportation or imprisonment or to an offence not of a technical nature committed by the member in his professional capacity.

DISCIPLINARY ACTION AGAINST PROFESSIONAL MISCONDUCT

ICSI has a three-tier mechanism to deal with Professional misconduct of its members – Disciplinary Directorate, Board of Discipline & Disciplinary Committee.

Disciplinary Directorate makes investigations in respect of any information or complaint received by it.

1)If the member is guilty of any professional or other misconduct mentioned in the First Schedule, Disciplinary Directorate places the matter before the Board of Discipline.

2)If the members is guilty of any professional or other misconduct mentioned in the Second Schedule or in both the Schedules, Disciplinary Directorate places the matter before the Disciplinary Committee.

The Board of Discipline and Disciplinary Committee on referral by Disciplinary Directorate, after affording the member an opportunity of being heard make an order and take any one or more of the following actions:

d) reprimand the member

e) remove the name of the member from the Register

f) impose fine

For the purpose of an inquiry under the provisions of CS Act, the Disciplinary Directorate, Board of Discipline & Disciplinary Committee have the same powers as are vested in a civil court.

 

QUALITY REVIEW BOARD

 

CS Act provides for establishment of Quality Review Board to perform the following functions:

a)to make recommendations to the Council with regard to the quality of services provided by the members of the Institute

b)to review the quality of services provided by the members of the Institute including secretarial services; and

c)to guide the members of the Institute to improve the quality of services and adherence to the various statutory and other regulatory requirements

ICSI CODE OF CONDUCT AND ETHICS FOR COUNCIL MEMBERS AND SENIOR MANAGEMENT OF THE INSTITUTE

There is a dramatic increase in the expectations of members, students and other stakeholders that all those who are vested with policy/decision making should act and conduct themselves as per certain ground rules of ethical conduct. The purpose of this Code is therefore, to lay down certain ground rules to promote ethical conduct and good practices and to deter wrong-doing. The purpose of the Code is also to make the relationship mutually pleasant and productive and to enhance the sense of community with common values and mission. Further Code of Conduct shall be a step towards ethical decision making in which strategic management decisions result from due deliberations and objective analysis of facts, distanced from personal biases, leanings, subjectivity or emotional perceptions.

The Code is designed to assist in defining appropriate personal and professional conduct, to provide guidance in the identification and resolution of ethical issues, and to help the members of the Council and the members of the Senior Management of the Institute to maintain the culture of honesty, integrity, transparency and accountability.

The Code of Conduct shall be in addition to and not in derogation of the Code of Conduct to members of the Institute as regards the Council Members and the Code of Conduct laid down in the ICSI Service Rules as regards the members of the Senior Management. Every Council Member and Member of the Senior Management must comply with the letter and spirit of this Code.

SEMINARS, MANAGEMENT DEVELOPMENT PROGRAMS, PROFESSIONAL DEVELOPMENT PROGRAMS, REGIONAL & NATIONAL CONVENTIONS

ICSI regularly conducts seminars, MDP, PDP, Regional & National conventions to enable Members participate in the same to deliberate and update their knowledge in the areas of Company Law, Competition Law, Industrial & Labour laws, WTO, Intellectual Property Rights, Corporate Governance, Capital & Financial Markets, Mergers & Acquisitions, Securities Management, Joint Ventures, Foreign Collaborations, etc.

CONCLUDING REMARKS

Thus, we can see that these Professional Institutes are striving hard to inculcate and maintain professionalism in their Members by keeping them trained, updated and informed of latest developments in their professional field, in the present era of globalization as well as enforcing a code of conduct and ethical behaviour.

SATYAM EPISODE & PROFESSIONALISM

Satyam episode has brought out clearly the importance of professionalism among professionals. It has clearly embarrassed professional folks, as various professionals have failed to exercise ethical standards and professional conduct:

- Internal Auditors (Incidentally, the Internal audit department of Satyam bagged the Best Internal Audit Department award from Institute of Internal Auditors, USA)

- External Auditors (One of the Big4)

- Company Secretaries

- Independent Directors

- Audit Committees

What were these professionals doing while the fraudulent activities of gigantic proportions were going on allegedly for so many years, will be the question raised by Professional fraternity, Investment community and General public alike.

There could have been four scenarios:

1) These professionals would have been part of the fraud, in which case they clearly failed the test of professionalism. If media reports are to be believed, the external auditors One hopes the law will it course and will be allowed to take its course.

2) These professionals would have been unaware of the fraudulent activities. This again raises questions on the Competence of these professionals in their failure to locate the fraud of such proportions. Clearly, there is a need for a relook on Auditing Standards, Accounting Standards, Auditing Sampling Methods, Functioning of Independent Directors and Audit Committees

3) These professionals would have known the fraudulent activities but were afraid of losing their jobs if they turn whistle-blowers. This brings out the need for a law in India for protection of Whistle-blowers assuring their jobs in case the professionals function as Whistle-blowers. Professional Institutes should also come out strongly in favour of their Members who turn whistle-blowers and must help them.

4) These professionals would have known the fraudulent activities but were not aware or sure how to proceed to inform the relevant authorities. Here comes the role of Professional Institutes in helping their Members to provide a Helpline and appointment of Ethics Counsellor to help such Members in resolving the ethical conflicts. Further, it would be appropriate for the Professional Institutes to include certain hours of Ethical topics as part of CPE ala IMA, USA.

Professionalism is just not about possessing the necessary skills & competence to discharge professional duties but also discharging such duties with other qualities - honesty, integrity, objectivity, due diligence and discretion.

In the wake of corporate scams like Enron, Worldcom, Satyam the importance of ETHICAL STANDARDS and foster such ethical standards in the members of Professional Bodies cannot be overemphasized. Professional Bodies must start giving greater importance to ETHICAL TOPICS in their curriculum and help their Members solving ethical dilemmas in discharge of their professional duties.

In India, professionals are well-trained in the concepts part but there is less emphasis on ethical front.

During my interaction with few Professional groups – professionals like CS & CMAs have expressed surprising opinions like:

- Professional will land up loosing his Job if he chooses to be a whistle blower against the will and wish of the management.

- If an Individual sitting on the Volcano and if after quite for some Volcano burst down who is responsible Volcano or said individual

 

This clearly shows that such professionals are facing ethical dilemmas in their professional life and are not sure of the course of action to be taken.

Though Professional Institutes like ICWAI & ICSI have provisions embodied in their respective Acts, namely CWA Act & CS Act to prevent/discourage/deter its Members in indulging in Professional misconduct, but these provisions are in my view, amounts to negative reinforcement – these provisions define what is Professional misconduct by listing certain acts as amounting to Professional misconduct by way of Schedules to the Act.

Nowhere these Acts define what is Professional conduct!!! One may just have to assume that whatever act does not amount to Professional misconduct is just a Professional conduct.

Instead, there should be a positive reinforcement by defining what is Professional conduct in these Acts itself and provide clear guidelines on what conduct the Members are expected to display and train them in that way to play the role of Whistle-blowers wherever and whenever necessary.

It is also high time, ICWAI & ICSI push the Federal Government to pass the Law for protection of Whistle-blowers.

 B V Prabhakar

Concluded.

Profession, Professional, Professional Body & Professionalism- 6 ICSI

Tuesday, April 7th, 2009

This is part 6 of the topic Professional Body and Professionalism by CMA B V Prabhakar. He discusses on how accounting bodies IMA-USA, ICWAI-INDIA & ICSI-INDIA apply the above principles.View CMA Prabhakar's profile on LinkedIn

III. INSTITUTE OF COMPANY SECRETARIES OF INDIA (ICSI)(www.icsi.edu)

The Institute of Company Secretaries of India (ICSI) is constituted under an Act of Parliament i.e. the Company Secretaries Act, 1980 (Act No. 56 of 1980) is the only recognized professional body in India to develop and regulate the profession of Company Secretary(CS) in India and the Institute of Company Secretaries of India(ICSI) rewards the certificate of bestowing the designation of Company Secretary(CS) to a candidate qualifying for the membership of the Institute of Company Secretaries of India(ICSI).The Institute of Company Secretaries of India(ICSI) has on its rolls over 20,000 members including over 3,000 members holding certificate of the practice and has totally registered over Five Lakh Twenty Thousand students.The affairs of the Institute of Company Secretaries of India (ICSI) are managed by a council consisting of fifteen elected members and five nominees of the Central Government.Pursuant to section 383A of the Companies Act, 1956, companies having a paid -up share capital of Rs 2 crore or more, as prescribed by the Central Government, are statutorily required to appoint a whole-time Company Secretary (CS).The major contribution of Company Secretary (CS) is in corporate sector. Company Secretary (CS) is an important professional aiding the efficient management of the corporate sector. Company Secretary (CS) is designated as an officer under the Companies Act. Company Secretary (CS) has to interact, coordinate, integrate and cooperate with various other functional heads in a company.A member of the Institute of Company Secretaries of India(ICSI) may also practice independently as a professional after obtaining a certificate of practice from the Institute of Company Secretaries of India(ICSI) as provided in Company Secretaries Act,1980.Vision Statement “To be global leader in development of professionals specialising in corporate governance”Mission Statement “To continuously develop high caliber professionals ensuring good corporate governance and effective management and carry out proactive research and development activities, for protection of interest of all stakeholders, thus contributing to public good”RESEARCH & TRAINING ICSI established CENTER FOR CORPORATE RESEARCH & TRAINING (CCRT) with the following objectives:Objectives * To develop professional capability and career prospects of the Company Secretaries and other corporate professionals.* To serve as a center of Corporate Excellence for Corporate Governance and Business Ethics, Corporate Research and Corporate higher learning by harnessing all available resources, national and international.* To promote original and contemporary applied research, higher learning and conduct training programs (residential and non-residential) in various streams of corporate sector through modern and advanced methodology.* To enter into collaboration/arrangements with foreign institution in the field of research and training and to facilitate exchange of skills, knowledge and data base including faculty exchange programs with national and international bodies and other research institutions.* To publish research papers, literature or publications including research bulletins, periodicals and consultative papers on any new legislation in areas of Corporate Laws, Finance and Capital Markets, etc to act as a Think Tank for Government, regulatory bodies and trade and industry on assignment basis.* To act as In-House consultants to ICSI on Human Resources and relates areas.* To provide professional consultancy of higher order employing contemporary methods and practices, and undertake corporate diagnostic studies, field surveys and data base services.Infrastructure Facilities ICSI-CCRT is equipped with state of art training and research relates facilities, a pleasant environ and world class physical infrastructure facilities and is ideally located.The facilities include an auditorium equipped with pleasant décor, latest audio visual, acoustics, lighting and public address system, two well furnished computer rooms/labs, two conference halls each equipped with latest facilities such as TC, VCR Projector, Audio Visual Decks, Public Address System, classroom/lecture halls of variable sizes equipped with elegant furniture and other training related equipments. The centre accommodates indoor and outdoor recreation facilities, two well equipped dining halls and a roof garden-cum-cafeteria for the recreational convenience of the inmates.The Residential Wing accommodates participants and guests and all facilities are comfortably air-conditioned with pleasant interiors providing conducive environment for learning and research.A Library with computers, furnished with audio visuals and internet facility housing over 3000 books, current periodicals and reference literature is also in place.CORPORATE TRAINING FACILITIES A new activity has been added to CCRT’s training initiatives for the students through Residential Secretarial Modular Training Programme. During the year, 4 such programmes were organised at CCRT and the response to the programmes has been very good. Participants from all over India, mainly from non-metro centres took advantage of these programmes and got opportunity for interaction with expert professional faculty. In addition to the core subjects of a normal SMTP programme, the participants were exposed to topics on general management, human relations, financial markets, etc. at the pre-dinner sessions. They also had the benefit of yoga and meditation sessions in the morning from professional trainers.RESEARCH INITIATIVESObjectives1. Fostering and nurturing research initiatives among members of the Company Secretaries profession and other researchers2. Developing on an on-going basis information and insights into corporate/related laws, their delivery mechanism, need for harmonization/changes in light of emerging realities, corporate governance etc.3. Using thus developed knowledge base for brand building and for purposes of interacting with the government, regulatory bodies and international agencies.Illustrated list of Topics of Research1. Central Listing Authority.2. Functions & Role of Private Liquidator.3. A comparative Analysis of The Companies Act, 1956 vis-a vis Corporate Laws in other countries.4. Role, Functions and Responsibilities of Independent Directors.5. WTO and IPRs : Possible Future Scenario.6. Transformation of Co-operative Societies into Producer Companies.7. Secretarial Audit.8. Opening up of the Services Sector - Post WTO Scenario.9. Capital Market Developments in the Next Five Years-A Road Map.10. Harmonisation of Laws relating to Securities.11. Corporate Governance - Need for Harmonisation of Companies Act with Listing Agreement.12. Mergers & Amalgamation.13. Buy Buck of Shares & its Impact.14. Workers Participation in Management in the Context of Company Law.15. Postal Ballot16. Need for Changes/Simplification of Laws relating to Creation of Charges.17. National Company Law Tribunal.18. Arbitration and Conciliation Act & its Role in the Delivery of Justice in India.19. Impact of Internet on Functioning of Companies -On Line Voting & Board Meeting Trough Video Conferencing.20. Securitisation and Reconstruction of Financial Assets.21. Business Process Outsourcing - Legal Aspects.22. Employees Stock Option Schemes.23. Revisiting the Companies Act.24. Model Listing Agreement25. Emerging Role of Company Secretaries in International Markets in a globalised environmentCORPORATE RESEARCH SERVICESAs a part of its ongoing activity in conducting sponsored studies on various topics, ICSI-CCRT completed the assignment from Indian Institute of Bankers (IIB) for preparation of study material on “Operations and Regulation of Capital Markets”. The study kit has been well appreciated.ICSI-CCRT conducted a study on behalf of State Bank of India (SBI) on “Recovery Experiences in respect of Personal Segment Advances” covering 40 of their branches all over India. The report has been submitted to SBI.Based on a proposal submitted to National Stock Exchange (NSE) under NSE’s Research Initiative, on “Corporate Social Responsibilities Initiatives by NSE NIFTY Companies – Content, Implementation Strategies & Impact”, a study has been undertaken by CCRT.SECRETARIAL STANDARDSCompanies follow diverse secretarial practices and, therefore, there is a need to integrate, harmonise and standardize such practices so as to promote uniformity and consistency.The Institute of Company Secretaries of India, acknowledging this need has started issuing Secretarial Standards on various topics. Compilation of Secretarial Standards by the corporate sector will lead to good corporate governance practices, making them comparable with best practices in the world.So far, ICSI has issued the following Secretarial Standards:SS-1: Meetings of the Board of DirectorsSS-2: General MeetingsSS-3: DividendSS-4: Registers and RecordsSS-5: MinutesSS-6: Transmission of Shares and DebenturesSS-7: Passing Resolutions by CirculationSS-8: Affixing of Common SealSS-9: Forfeiture of sharesGUIDANCE NOTESIn addition to SECRETARIAL STANDARS, ICSI also issues Guidance Notes on various topics of importance to help Members have a clarity and uniformity of understanding on the topics:Guidance Note on Board’s ReportGuidance Note on Compliance CertificateGuidance Note on DividendGuidance Note on Code of Conduct for CSGuidance Note on Certification under Investor Education and Protection FundGuidance Note on Buy-Back of SecuritiesGuidance Note on Meeting of the Board of DirectorsGuidance Note on Passing of Resolution by Postal BallotGuidance Note on General MeetingsGuidance Note on Signing of Annual ReturnGuidance Note on Corporate Governance CertificateGuidance Note on Preferential Issue of SharesPUBLICATIONSICSI publications aims at providing framework of best practices, processes and systems of selected topics :Corporate Governance Modules of Best PracticesProhibition of Insider Trading Law & ProcedurePractitioner’s Guide to Consumer Protection LawReferencer on Limited Liability Partnership Bill, 2006Referencer on MCA21 (including e-forms) with free CDHandbook on Mergers, Amalgamations & Takeovers Law and PracticeSecurities Management and CompliancesSegment wise Role of Company SecretariesCompany Meetings , a CompendiumWTO, International Trade, Joint Ventures and Foreign CollaboratorsAre you a Company DirectorDoing Business in ThailandHandbook on Internal Audit of Operations of Depository ParticipantsMonograph on Position, Duties & liabilities of DirectorsListing Agreement, a CompendiumDelisting Of SecuritiesHandbook On Arbitration and Alternative Dispute ResolutionCHARTERED SECRETARY“Chartered Secretary” is a leading Corporate journal with articles of high quality on the latest developments in Corporate Laws & General Management. All important and emerging topics are covered – Company Law, Competition Law, Industrial & Labor laws, WTO, Intellectual Property Rights, Corporate Governance, Capital Markets, Mergers & Acquisitions, Securities Management, Joint Ventures, Foreign Collaborations, etc.

Profession, Professional, Professional Body & Professionalism- 5 ICWAI

Wednesday, April 1st, 2009

This is part 4 of the topic Professional Body and Professionalism by CMA B V Prabhakar. He discusses on how accounting bodies IMA-USA, ICWAI-INDIA & ICSI-INDIA apply the above principles.View CMA Prabhakar's profile on LinkedIn

STATEMENTS ON STANDARD AUDITING PRACTICES

The Cost Accounting Standards, Statements on Standard Auditing Practices and Guidance Notes establish standards which have to be complied with to ensure that costing statements are prepared in accordance with generally accepted Cost accounting standards and that auditors carry out their audits in accordance with the generally accepted auditing practices.They become mandatory on the dates specified in the respective document or notified by the Council.

Cost Accounting Standards (CAS)

Cost Accounting Standards are formulated by the Cost Accounting Standards Board and issued by the Council of the Institute.The Cost Accounting Standards are issued for use in the presentation of Cost statements. They become mandatory on the dates specified in the respective Accounting Standards or notified by the Council in this behalf.

Every Cost Statement shall comply with the cost accounting standards.Where the Cost Statements of the company do not comply with the Cost Accounting standards, such companies shall disclose the deviation from the standards, the reasons for such deviation; and the effect, if any, arising due to such deviation.ICWAI issued the following CAS so far:CAS 1 : “CLASSIFICATION OF COST”CAS 2 : “CAPACITY DETERMINATION”CAS 3 : “OVERHEADS”CAS 4 : “COST OF PRODUCTION FOR CAPTIVE CONSUMPTION”CAS 5 : “COST OF TRANSPORTATION”CAS 6: “ DETERMINATION OF ARM’S LENGTH PRICECAS 7 : “MATERIAL COST”GUIDANCE NOTES

‘Guidance Notes’ are primarily designed to provide guidance to members on matters which may arise in the course of their professional work and on which they may desire assistance in resolving issues which may pose difficulty.Guidance Notes are recommendatory in nature. A member should ordinarily follow recommendations in a guidance note .

“If the same have not been followed, the member should consider whether keeping in view the circumstances of the case, a disclosure in his report is necessary”ICWAI has recently issued two guidance notes:GUIDANCE NOTE ON INTERNAL AUDIT

The Guidance Note on Internal Audit describes it as an independent and objective oriented assurance and consulting activity designed to add value and improve an organisation’s operations. It helps an organisation accomplish its objectives by bringing in the systematic and disciplined approach to evaluate and improve the effectiveness of the operations of an organisation in totality.”

GUIDANCE NOTE ON COST OF PRODUCTION FOR CAPTIVE CONSUMPTION

The Guidance Note on Cost of Production for Captive Consumption addresses the need of the Cost Practitioners in the field to have an authoritative guidance on various aspects involved in the valuation process and takes into consideration the methodology prescribed by the Cost Accounting Standard-4 issued by the Institute earlier.

Self regulation guidelines

Self Regulation Guidelines/directions are given in the context of use of designation etc. and manner of printing letter-heads and visiting cards, of the President, Vice-President of the Institute, Members of the Council, Chairmen of various Non-­Standing Committees of the Institute; Chairmen, other office ­bearers and Members of the Regional Councils; Chairmen, other office bearers and Members of the Managing Committees of Chapters

A.QUALITY REVIEW BOARD

CWA Act provides for establishment of Quality Review Board to perform the following functions:a) to make recommendations to the Council with regard to the quality of services provided by the members of the Instituteb) to review the quality of services provided by the members of the Institute including cost audit services; andc) to guide the members of the Institute to improve the quality of services and adherence to the various statutory and other regulatory requirementsB.CONTINUOUS EDUCATION REQUIREMENTTo meet the requirement of professional skills in the current changing dynamic economic scenario, Cost Accountants in practice and service (members of our Institute) should equip themselves with the new skills and concepts to meet the challenges and render yeomen’s services to trade, commerce and industry. Therefore, ICWAI prescribes mandatory training to the members in practice and service under Continuing Education Programme as under:For Members in Practice(i) The member should undergo minimum mandatory training for 20 hrs. in a period of 3 years.(ii) The minimum hours of training in a year is 6 hrs.(iii) The certificate of attendance for training have to be enclosed with the application for renewal of Certificate of Practice.For Members in Service

(i) The member should undergo minimum mandatory training for 12 hrs. in a period of 3 years.(ii) The minimum hours of training in a year is 4 hrs.(iii) The certificate of attendance for training have to be enclosed with the application for renewal of membership.The attendance of members in National Cost Convention, Regional Cost Convention, Seminars/Workshops conducted by the Institute/Regional Councils/Chapters (both paid/unpaid programme) will be reckoned against the requirement of mandatory training period under this scheme.The requirement specified above will not apply to a member who has attained the age of 65 years.SEMINARS, MANAGEMENT DEVELOPMENT PROGRAMS, PROFESSIONAL DEVELOPMENT PROGRAMS, REGIONAL & NATIONAL CONVENTIONS

ICWAI regularly conducts seminars, MDP, PDP, Regional & National conventions to enable Members participate in the same and update their knowledge in the areas of Cost Management, Performance Management, Management Accounting concepts like Lean, ABC, JIT etc., Direct & Indirect Taxation, Accounting Standards, Management Audit and Financial Management.A.PUBLICATIONS

The Management Accountant JournalThe Management Accountant is one of the most valued professional journals in India on Cost and Management Accounting, Cost management, Economics, Finance, Management, Corporate Laws and other relevant subjects. It is the official organ of ICWAI.The Journal has an active circulation of around 25,000 copies per month circulating among the students and members of the Institute - most of them holding key positions in corporate and government sectors, education, consultancy, trade and services etc. Besides, it circulates among various other subscribers in India and abroad – most of them are institutional subscribers consisting of leading corporate houses, Universities and Institutes, professional and regulatory bodies in India and abroad.The journal has been acclaimed widely not only in India but abroad also and many of its articles, features and editorials are extensively quoted in the national and international media. Two articles published in 1996-97 have also ranked among the best 10 articles on Management Accounting published in the world by International Federation Of Accountants.Industry-Wise PublicationsICWAI has published Cost Accounting Record Rules And Cost Audit (Report) Rules for more than 30 industries – such as – Cycle, Cement, Automobile Battery, Tyre & Tube, Tractor, Aluminium, Vanaspati, Sugar, Paper, Fertilizer, Milk Food, etc.B.RESEARCH PUBLICATIONSICWAI has brought out the following Research publications:- Financing Asset Replacement- Inflation Accounting As A Tool to Fight Inflation- Management Accounting Problems in Small Scale Industries- Inflation Accounting Tools and Techniques- Glossary Of Management Accounting Terms- Corporate Capital Structure and Cost Of Capital- Cost and Quality Control- Management Information Reports for Operating Managers- Cost Accounting in Commercial Banking Industry- Farm Management Accounting And control- Management Accountant and The Computer- An Introduction to Cost Accounting in Commercial Banking Industry- Management And Accounting for Research and Development - The Indian Praxis- Research Bulletin ( Biannual each issue )- Guidelines On Management Accounting: Capacity Determination- Profit Planning- Mutual Funds In India- Human Resources AccountingC. MANAGEMENT ACCOUNTING GUIDELINESICWAI has so far brought out four Management Accounting Guidelines to provide guidance to its Members, Industries and Regulatory bodies in the area of Management Accounting.MAG-IIMPLEMENTING BENCHMARKINGMAG - IIVALUATIONS MANAGEMENT – A TOOL OF MANAGEMENT ACCOUNTANTMAG – IIIIMPLEMENTING CORPORATE ENVIRONMENTAL STRATEGIESMAG-IVTOOLS AND TECHNIQUES FOR ENVIRONMENTAL ACCOUNTING FOR BUSINESSD.RESEARCH CENTRESICWAI has taken initiative to set up Research & Training Centres by laying the foundation stone for the Hyderabad Centre of Excellence, which will be the first in a series of such centres to be set up by ICWAI for research and training in the country.It will be the state-of-the-art facility spread across 2,000 square metres with five floors which would primarily focus on research activities in services sector.

Profession, Professional, Professional Body & Professionalism - 4

Sunday, March 22nd, 2009

This is part 3 of the topic Professional Body and Professionalism by CMA B V Prabhakar. He discusses on how accounting bodies IMA-USA, ICWAI-INDIA & ICSI-INDIA apply the above principles.View CMA Prabhakar's profile on LinkedIn

II. INSTITUTE OF COST & WORKS ACCOUNTANTS OF INDIA (ICWAI) (www.icwai.org)ICWAI is a premier statutory accounting body established by an Act of Indian Parliament, namely, Cost & Works Accountants Act, 1959 (CWA Act) to impart and develop cost & management accountancy profession in India. It operates under jurisdiction of Ministry of Corporate Affairs of Central (Federal) Government of India. It has chapters all over India and also in Middle East.Vision Statement“ICWAI would be the preferred source of resources and professionals for the financial leadership of enterprises globally “Mission Statement“ICWAI professionals would ethically drive enterprises globally by creating value to stakeholders in the socio-economic context through competencies drawn from the integration of strategy, management and accounting.”COST ACCOUNTING RULES & STATUTORY COST AUDITOne of the salient features of the Indian Companies Act is the provision for mandatory requirement of maintenance of Cost accounting records for certain industries and ordering of cost audit by Central Government for certain companies covered by such provision.Section 209(1) (d) of the Companies Act, 1956 prescribes mandatory maintenance of cost accounting records for certain class of manufacturing industries .Section 233B of the Act empowers Central Government to order Cost Audit for the Companies required to maintain cost accounting records by a notification. Such audits are conducted by Members of ICWAI in practice.A. ETHICS & PROFESSIONAL CONDUCT:According to ICWAI Guidelines, as professionals in the field of Cost and Management Accounting, the members of the Institute are bound by a code of professional ethics. This code stipulates and binds them to the highest level of care, duty and responsibility to their employers and clients, the public and their fellow professionals.Cost accountants have to observe fundamental principles, which are:(a) IntegrityA cost accountant should be straightforward and honest in performing his services.(b) ObjectivityA cost accountant should be fair and should not allow prejudice or bias or the influence of others to override objectivity.(c) CompetenceA cost accountant must refrain from performing any service which he is not competent to carry out unless proper advice and assistance is obtained to ensure that the service is performed to the satisfaction.(d) ConfidentialityA cost accountant must not disclose information acquired during the course of his engagement and should not use or disclose any such information without proper and specific authority or unless there is a legal or professional right or duty to disclose.(e) Professional BehaviourA cost accountant should act in a manner consistent with the good reputation of the profession.THE CWA ACT, 1959ICWAI, being a statutory body is regulated by the CWA Act and for the management of the affairs and for discharging the functions assigned to it by the Cost and Works Accountants Act, there is a Council of the Institute.Every member of the Institute is entitled to designate himself as a Cost Accountant.There are two classes of members,a)those who are in practice andb)those who are otherwise occupied.The practising members conduct statutory cost audits, excise audits and certifications. Conducting of such statutory audits and certifications require high degree of competence and proper professional conduct.The Council has been empowered to institute any enquiry into cases where it is prima facie of the opinion that a member is guilty of professional or other misconduct.Professional misconduct definedSection 22 of the Act read with the Schedules to the Act , contains an illustrative, though not exhaustive definition of “Professional misconduct”. These constitute the Code of professional conduct applicable to Cost Accountants.Professional Misconduct falls under the following categories:FIRST SCHEDULE:Part I : Professional misconduct in relation to Cost Accountants in PracticePart II : Professional misconduct in relation to Members of the Institute in servicePart III: Professional misconduct in relation to Members of the Institute in generallyPart IV: Other misconduct in relation to Members of the Institute generallySECOND SCHEDULE:Part I : Professional misconduct in relation to Cost Accountants in PracticePart II : Professional misconduct in relation to Members of the Institute in servicePart III: Other misconduct in relation to Members of the Institute generally“Other Misconduct”A member is liable to disciplinary action under the CWA Act, if he is found guilty of any professional or “other misconduct”.”Other misconduct” as listed in Part III to the Second Schedule has not been defined in the Act but this provision empowers the Council to enquire into any misconduct of a member even if it does not arise out of its professional work. This is considered necessary because a Cost Accountant is expected to maintain the highest standards of integrity even in his personal affairs and any deviation from these standards, even in his non-professional work, would expose him to disciplinary action.For example, a member who is found to have forged the will of a relative, would be liable to disciplinary action even though the forgery may not have been done in the course of his professional duty.”Other misconduct” would also relate to conviction by a competent court for an offence involving moral turpitude punishable with transportation or imprisonment or to an offence not of a technical nature committed by the member in his professional capacity.DISCIPLINARY ACTION AGAINST PROFESSIONAL MISCONDUCTICWAI has a three-tier mechanism to deal with Professional misconduct of its members – Disciplinary Directorate, Board of Discipline & Disciplinary Committee.Disciplinary Directorate makes investigations in respect of any information or complaint received by it.1)If the member is guilty of any professional or other misconduct mentioned in the First Schedule, Disciplinary Directorate places the matter before the Board of Discipline.2)If the members is guilty of any professional or other misconduct mentioned in the Second Schedule or in both the Schedules, Disciplinary Directorate places the matter before the Disciplinary Committee.The Board of Discipline and Disciplinary Committee on referral by Disciplinary Directorate, after affording the member an opportunity of being heard make an order and take any one or more of the following actions:a)reprimand the memberb)remove the name of the member from the Registerc)impose fineFor the purpose of an inquiry under the provisions of CWA Act, the Disciplinary Directorate, Board of Discipline & Disciplinary Committee have the same powers as are vested in a civil court.To be continued….

Profession, Professional, Professional Body & Professionalism - 3

Friday, March 13th, 2009

This is part 3 of the topic Professional Body and Professionalism by CMA B V Prabhakar. He discusses on how accounting bodies IMA-USA, ICWAI-INDIA & ICSI-INDIA apply the above principles.View CMA Prabhakar's profile on LinkedIn

PROFESSIONAL LEARNING CENTERIMA has an online Professional Learning Center with access to Programs designed for Continuing education courses for Certified Management Accountants (CMAs) and professional development programs designed to help management accountants and finance professionals build their careers.

All IMA professional development programs relate to one or more of the five core competencies of management accounting:

WEBINARSWebinars are designed to actively engage members in the latest trends and thinking in the profession without having to leave the office or home. IMA conducts webinars session at least a month on latest topics conducted by experts in the field.

CONVENTIONSIMA regularly conducts seminars, get-togethers, and conventions, with educational sessions, speakers, workshops and valuable networking opportunities to build members skills and capabilities to become a valuable, strategic business partner, and a champion to their company’s bottom line.C. RESEARCH SUPPORT i) Foundation for Applied ResearchThe IMA Foundation for Applied Research, Inc. (FAR) was formed to ensure sufficient resources, both human and financial, to sustain and augment IMA’s role as a valued center of research on the most important practice issues of the day while also identifying financial management trends to meet the challenges of the next millennium.The Trustees who oversee FAR’s research activities represent management accountants and financial professionals from Corporate America to academe. Collectively, they have established research priorities to address the following questions:

  1. How can management accounting and finance best contribute to improving competitiveness and achieving continuous improvement in the enterprise?
  2. How does management accounting affect management behavior?
  3. What are important emerging cost management and performance measurement techniques and issues?
  4. How is globalization affecting management accounting and finance?
  5. How is emerging technology being used to improve the effectiveness of management accounting?

FAR’s MissionFAR’s mission is to develop and disseminate timely management accounting and financial management research findings that can be applied to current and emerging business issues.

Research ProcessTopics are identified with input from FAR’s constituency base. A call for research is issued to the research community. FAR trustees select the research team and establish a project committee of subject matter experts to work with the researchers in developing FAR’s research. Representatives of FAR maintain relationships with various standard-setting and regulatory bodies as well as other professional accounting organizations to monitor and influence proposals and participate in cooperative studies. Findings are presented at conferences and seminars and are published as monographs or books.IMA’s Foundation for Applied Research goal is to create discussion papers, Statements on Management Accounting and practitioner-oriented articles based on complete research for publication in Strategic Finance magazine and/or Management Accounting Quarterly.ii) The IMA Research Center of ExcellenceThe IMA Research Center of Excellence (COE) is focused on delivering research, best practices, and tools for practitioners in accounting and finance who are involved in decision support, planning, budgeting, forecasting, risk management, and internal control over financial reporting.In addition to the Foundation for Applied Research (FAR), the CoE is composed of five research practices:

  • Leadership Strategies and Ethics
  • Technology Enablement
  • Strategic Cost Management
  • Business Performance Management
  • Finance Governance, Risk, and Compliance

The COE is dedicated to advancing the management accounting and finance profession and the careers of practitioners, enabling them to build sustainable value within their operations.iii) Ventana Research Studies

IMA has signed a cross-marketing and research agreement with Ventana Research, a research and advisory services firm focused on performance management and the integration of finance and IT. Under the agreement, IMA members will have access to Ventana Research syndicated research reports, publications and research analysts. IMA members can participate in research studies and receive the results of those studies on topics like performance management and technology.iv) Research LibraryThe McLeod information Center covers the fields of Management Accounting and Financial Management.Custom BibliographiesIf Members need information on a specific topic, a tailor-made reading list can be prepared , based upon key concepts provided by E-mail, Regular mail, or Fax.Full-text ArticlesCopies of articles published in IMA or non-IMA periodicals can be sent to the members by E-mail, Regular mail, or Fax on request.Internet ResearchShould members need research services, the Center can scout Internet databases for journal & news articles, case studies, and other research of the Business and Management resources, producing up-to-date, austive bibliographies, as well as full-text-article sets, to meet the member’s specifications.D. PUBLICATIONSi) Strategic Finance is the flagship publication of the Institute of Management Accountants (IMA®). An award-winning monthly magazine, it provides the latest information about practices and trends in finance, accounting, and information management that will impact members (mostly controllers, CFOs, and their staffs) and their jobs. The thought-provoking articles offer advice that will help financial professionals perform their jobs more effectively, advance their careers, grow personally and professionally, and make their organizations more profitable.ii) Management Accounting Quarterly is a quarterly, refereed online journal that contains in-depth articles by and for academics and practitioners of corporate (management) accounting and financial management.Some of the subjects covered are cost/management accounting techniques, ABC/ABM, RCA, GPK, statistical process controls, target costing, theory of constraints, methods of calculating stock options, techniques to improve accounting and finance education, new theories in finance and accounting, and much more.iii) Statements on Management Accounting (SMAs) present the views of IMA regarding management accounting and financial management issues. In their development, the Statements are subjected to a rigorous exposure process.SMAs are classified based on the following IMA research practice areas:

  • Leadership Strategies and Ethics
  • Technology Enablement
  • Strategic Cost Management
  • Business Performance Management
  • Finance Governance, Risk, and Compliance (FGRC)
  • Practice of Management Accounting

iv) IMA Educational Case Journal (IECJ®),IMA® launched the IMA Educational Case Journal (IECJ®), a quarterly, on-line journal. The mission of the Journal is to publish teaching cases and research related to case writing or teaching with cases in management accounting and related fields.

The journal accepts cases covering a wide range of topics, reflecting the diverse skill set required of management accountants today. International submissions are welcome and encouraged. The IECJ is listed in the Cabell’s Directory of Publishing Opportunities.

Profession, Professional, Professional Body & Professionalism - 2

Wednesday, March 4th, 2009

This is part 2 of the topic Professional Body and Professionalism by CMA B V Prabhakar. He discusses on how accounting bodies IMA-USA, ICWAI-INDIA & ICSI-INDIA apply the above principles.View CMA Prabhakar's profile on LinkedInEfforts of different professional bodies to promote professionalism.Let us now see the case of three Professional Bodies, IMA-USA, ICWAI-INDIA & ICSI-INDIA, and compile how these Professional Accounting Bodies ensure, build and promote Professionalism among its members.I. INSTITUTE OF MANAGEMENT ACCOUNTANTS , USA (www.imanet.org)The Institute of Management Accountants (IMA®) is the world’s leading organization dedicated to empowering management accounting and finance professionals to drive business performance.With a network of about 60,000 professionals, IMA provides a dynamic forum for management accounting and financial professionals to develop and advance their careers through its Certified Management Accountant (CMA®) program, cutting-edge professional research and practice development, education, networking, and the advocacy of the highest ethical and professional practices.Vision StatementThe world’s leading association for management accounting and finance professionals.Mission StatementTo provide a dynamic forum for management accounting and finance professionals to develop and advance their careers through certification, research and practice development, education, networking, and the advocacy of the highest ethical and professional practices.A. Statement of Ethical Professional Practice as issued by IMA:Members of IMA shall behave ethically. A commitment to ethical professional practice includes overarching principles that express our values, and standards that guide our conduct.PRINCIPLESIMA’s overarching ethical principles include: Honesty, Fairness, Objectivity, and Responsibility.Members shall act in accordance with these principles and shall encourage others within their organizations to adhere to them.STANDARDSA member’s failure to comply with the following standards may result in disciplinary action.I. COMPETENCEEach member has a responsibility to:

  1. Maintain an appropriate level of professional expertise by continually developing knowledge and skills.
  2. Perform professional duties in accordance with relevant laws, regulations, and technical standards.
  3. Provide decision support information and recommendations that are accurate, clear, concise, and timely.
  4. Recognize and communicate professional limitations or other constraints that would preclude responsible judgement or successful performance of an activity.

II. CONFIDENTIALITYEach member has a responsibility to:

  1. Keep information confidential except when disclosure is authorized or legally required.
  2. Inform all relevant parties regarding appropriate use of confidential information. Monitor subordinates’ activities to ensure compliance.
  3. Refrain from using confidential information for unethical or illegal advantage.

III. INTEGRITYEach member has a responsibility to:

  1. Mitigate actual conflicts of interest, regularly communicate with business associates to avoid apparent conflicts of interest. Advise all parties of any potential conflicts.
  2. Refrain from engaging in any conduct that would prejudice carrying out duties ethically.
  3. Abstain from engaging in or supporting any activity that might discredit the profession.

IV. CREDIBILITYEach member has a responsibility to:

  1. Communicate information fairly and objectively.
  2. Disclose all relevant information that could reasonably be expected to influence an intended user’s understanding of the reports, analyses, or recommendations.
  3. Disclose delays or deficiencies in information, timeliness, processing, or internal controls in conformance with organization policy and/or applicable law.

RESOLUTION OF ETHICAL CONFLICTIn applying the Standards of Ethical Professional Practice, members may encounter problems identifying unethical behaviour or resolving an ethical conflict.

When faced with ethical issues, members should follow their organization’s established policies on the resolution of such conflict.If these policies do not resolve the ethical conflict, then members should consider the following courses of action:

  1. Discuss the issue with the immediate supervisor except when it appears that the supervisor is involved. In that case, present the issue to the next level. If a satisfactory resolution is not achieved, submit the issue to the next management level. If the immediate superior is the chief executive officer or equivalent, the acceptable reviewing authority may be a group such as the audit committee, executive committee, board of directors, board of trustees, or owners. Contact with levels above the immediate superior should be initiated only with the superior’s knowledge, assuming he or she is not involved.
  2. Clarify relevant ethical issues by initiating a confidential discussion with an IMA Ethics Counsellor or other impartial advisor to obtain a better understanding of possible courses of action.
  3. Consult own attorney as to legal obligations and rights concerning the ethical conflict.

Mission of the Ethics ProgramEncourage organizations and individuals to adopt, promote and execute business practices consistent with high ethical standards, by providing valuable insight into the complexities that result from social and technological change.

The following definition of ethics is provided as a foundation for IMA members.

“Ethics in its broader sense, deals with human conduct in relation to what is morally good and bad, right and wrong. It is the application of values to decision making. These values include honesty, fairness, responsibility, respect and compassion.” - Rushworth Kidder, President, Institute for Global Ethics

As already explained above, IMA offers an ethics helpline service. Members of IMA as well as other financial professionals may contact this helpline for free, confidential guidance on ethical issues.The purpose of the helpline is to provide guidance to those in the profession that find themselves in an ethical dilemma.After a preliminary discussion of the problem to determine the kind of ethics matter being reported, an ethics counsellor will respond to the caller. Confidentiality is maintained at all times. The counsellor will not provide a specific resolution but will explain how the dilemma relates to the provisions of IMA’s Statement of Ethical Professional Practice.B. CONTINUING EDUCATION REQUIREMENTSCMAs are required to maintain their proficiency in the fields of management accounting and financial management. This includes knowledge of new concepts and techniques as well as their application in the management accounting and financial management professions. The objective is to maintain the professional competence of the individual and to enhance one’s ability to perform job-related requirements. The continuing education requirement is 30 hours per year.A broad range of subjects may be included in the programs for which hours of credit will be given- all aspects of accounting, financial management, business applications of mathematics and statistics, computer science, economics, management, production, marketing, business law, and organizational behaviour.All CMAs are required to complete a minimum 2 hours of continuing education on the subject of ethics as part of their 30-hour annual CPE requirement.IMA’s Statement of Ethical Professional Practice as depicted above, is an excellent framework for determining the types of ethical topics that are acceptable. The focus of the ethics education should be principally in the area of management accounting and financial management.Topics should include ethical considerations in the area of decision support, planning and control for accounting and finance professionals working inside organizations. Members are encouraged to address specific scenarios such as fraud in financial reporting, manipulation of budgets for personal gain, disclosure of confidential financial information and coverage of ethics within general business environment.To be continued….Regards,CMA B V Prabhakar

Profession, Professional, Professional Body & Professionalism - 1

Thursday, February 26th, 2009

Profession, Professional, Professional Body & Professionalism is a guest post by CMA B V Prabhakar. He will discuss on how accounting bodies IMA-USA, ICWAI-INDIA & ICSI-INDIA apply the above principles.

View CMA Prabhakar's profile on LinkedInPROFESSION & PROFESSIONALProfession has different meanings – employment or trade that everyone has and exercises in public. The professions are occupations that require specialized knowledge, educational training, high-level control over the content of work, organization, self, altruism, the spirit of community service and high ethical standards.Thus, Profession is a specialized activity of labour in a society, and the person who performs it is called : professional.The essentials of a Professional are:

  • gains the expertise through training/certification more often through college or graduate degree such as psychology, law, medicine, nursing, architecture, accounting or engineering
  • who provides a service ensuring the result with a specified quality consistently
  • maintains high ethical standards

PROFESSIONALISM & PROFESSIONAL BODYProfessional BodyA professional body is a group of people in a learned occupation who are entrusted with maintaining control or oversight of the legitimate practice of the occupation.Professional bodies play the following roles:

  1. They impart the necessary training and professional certification to indicate a person possesses qualifications in the subject area and often membership in a professional body is synonymous with certification.
  2. They act as a learned society contributing to continuous professional development so that they update their knowledge with latest techniques to ensure they deliver a service with a specified quality consistently.
  3. They are set up to safeguard the public interest. This is what gives them their legitimacy.
  4. Professional bodies enforce standards of ethics in their profession and have disciplinary mechanism to correct any deviations from the acceptable behaviour or conduct
  5. They act as a professional association (including legitimating restrictive practices) and represent the interest of their members
  6. They provide network opportunities among its members to share their knowledge and experiences for further uplifting of the profession. This could be through conducting regular seminars, professional development programs, and conventions.
  7. They conduct research in the area of their specialisation and help members in conducting the research activities
  8. They make publications in the areas of their specialisation such as Journals, Case studies, and articles.

In other words, Professional body strive to embody and enforce professionalism among its members.PROFESSIONALISMProfessionalism means just not possessing skills and competence to perform the professional duties but also meticulous adherence to undeviating courtesy, honesty, integrity, objectivity and responsibility in one’s dealings with clients/customers and associates, plus a level of excellence that goes over and above the commercial considerations and legal requirements.This series will explore how different bodies continue to promote professionalism. Part 2.CMA Prabhakar